INFORMATION OF THE COMPANY/ CAPITAL COMPOSITION

Transcription

1 INFORMATION OF THE COMPANY/ CAPITAL COMPOSITION NUMBER OF SHARES (Units) CURRENT QUARTER 03/31/2011 Paid-up Capital Common 227,836,623 Preferred 0 Total 227,836,623 Treasury Shares Common 0 Preferred 0 Total 0 Page: 1

2 Individual Financial Statements/Balance Sheet - Assets (In thousands of Brazilian reais - R$) Account Current Quarter Previous Year Account Description code 03/31/ /31/ Total assets 24,054,453 23,293, Current assets 4,132,724 3,574, Cash & Cash Equivalents 2,397,072 1,988, Receivables 1,109,638 1,108, Customers 969, , Other Receivables 140, , Balances with Related Parties 140, , Inventories 34,878 36, Taxes Recoverable 57, , Current Taxes Recoverable 57, , Other Current Assets 533, , Other 533, , Restricted Cash 292, , Other receivables 241,223 30, Non-current assets 19,921,729 19,718, Long-term assets 946, , Receivables 361, , Customers 361, , Deferred Taxes 91,340 77,913 Deferred Income Tax & Social Contribution 91,340 77, Credit with Related Parties 218, ,076 Credit with Controlling Shareholders 218, , Other Non-current Assets 275, , Indemnifications Receivable 146, , Judicial deposits 39,391 43, ANA National Water Agency 64,010 62, Other receivables 25,893 47, Investments 17,900 8, Shareholdings 17,900 8, Other Equity Interests 17,900 8, Property, Plant and Equipment 205, , Intangible 18,751,827 18,541, Intangible 18,751,827 18,541, Concession Contracts 10,888,322 10,732, Program Contracts 999, , Service Contracts 6,010,227 6,096, Software License 5,493 7,937 Page: 2

3 Account Current Quarter Previous Year Account Description code 03/31/ /31/ New Business 11,894 11,228 Concession Contracts Economic Value 519, ,278 Program Contracts Commitments 317, ,276 Page: 3

4 Individual Financial Statements/Balance Sheet - Liabilities and Shareholders Equity (In thousands of Brazilian reais - R$) Account code Account Description Current Quarter 03/31/2011 Previous Year 12/31/ Total liabilities and shareholders equity 24,054,453 23,293, Current liabilities 3,673,101 3,501, Labor and Social Security Obligations 250, , Social Security Obligations 18,049 26, Labor Obligations 232, , Suppliers 156, , Domestic Suppliers 156, , Tax Obligations 200, , Federal Tax Obligations 197, ,233 Income Tax and Social Contribution Payable 81,457 0 COFINS and PASEP (taxes on revenue) payable 47,773 48,149 INSS (Social security contribution) payable 23,256 24,112 Installment Program - Law /03 35,702 35, Other Federal Taxes 9,450 45, State Tax Obligations Municipal Tax Obligations 3,289 4, Loans and financing 1,276,350 1,239, Loans and financing 766, , In national currency 601, , In foreign currency 164, , Debentures 510, , Other payables 1,008, , Liabilities with related parties 11,460 11, Debts with controlling shareholders 11,460 11, Other 996, , Dividends and Interests on Equity Payable 354, , Accounts Payable 336, , Refundable amounts 57,767 60, Program contract commitments 90,409 38, Private Public Partnership 27,631 30, Agreement with São Paulo City 71,183 60,350 Page: 4

5 Account code Account Description Current Quarter 03/31/2011 Previous Year 12/31/2010 Hall Indemnities 11,545 17, Other payables 47,697 47, Provisions 780, , Civil, Labor and Social Security Provisions 104,165 96, Tax Provisions 5,397 3,191 Tax and Social Security Provisions 81,211 78, Civil Provisions 17,557 14, Other Provisions 676, ,372 Provision for Environmental and Deactivations Liabilities 22,422 22, Provisions for Customers 286, , Provisions for Suppliers 367, , Non-current liabilities 10,516,759 10,109, Loans and financing 7,146,874 6,969, Loans and financing 4,358,446 4,786, In national currency 1,947,443 2,667, In foreign currency 2,411,003 2,118, Debentures 2,788,428 2,182, Other payables 2,670,057 2,446, Other 2,670,057 2,446,661 Other Taxes and Contributions Payable 44,627 53, Social security charges 1,999,253 1,804, Program contract commitments 71, , Private Public Partnership PPP 313, , Indemnities 30,847 30, TAC Retired Participants 21,654 20, Deferred Cofins and Pasep 113, , Other payables 75,210 33, Provisions 699, , Civil, Labor, Tax and Social Security Provisions 289, , Tax Provisions 64,368 55,467 Tax, Social Security and Labor Provisions 65,029 59, Civil Provisions 159, , Other Provisions 410, ,940 Provision for Environmental and Deactivations Liabilities 40,904 42, Provisions for Customers 355, ,212 Page: 5

6 Account Current Quarter Previous Year Account Description code 03/31/ /31/ Provisions for Suppliers 13,722 13, Shareholders equity 9,864,593 9,681, Social Capital 6,203,688 6,203, Capital reserves 124, , Support to projects 108, , Incentive reserve 15,780 15, Profit reserves 3,353,857 3,353, Legal Reserve 460, , Additional Dividend Proposed 68,761 68, Reserve for Investments 2,825,048 2,825, Retained earnings (accumulated deficit) 182,793 0 Page: 6

7 Individual Financial Statements/Statement of Income (In thousands of Brazilian reais - R$) Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ Gross revenue from sales and/or services 2,294,623 2,163, Cost of sales and/or services -1,367,777-1,154, Cost of sales and/or services -928, , Construction Cost -439, , Gross profit 926,846 1,008, Operating (expenses)/income -497, , Selling expenses -178, , General and Administrative Expenses -321, , Other operating income 5,254 5, Other operating income 5,789 5, COFINS and PASEP (taxes on revenue) Other operating expenses -2,069-1, Loss on write-off of property, plant and equipment items , Tax incentives -1, Other Equity in subsidiaries Income before taxes and profit sharing 429, , Financial income -50, , Financial income 91,027 63, Financial income 95,945 63, Foreign exchange gains -4, Financial expenses , Financial expenses -210, , Foreign exchange losses 69,097-24, Income Before Taxes on profit 378, , Income Tax and Social Contribution on Net Income -195, , Current -209, , Deferred 13,380 57, Net Profit from Continuing Operations 182, , Net income/(loss) 182, , Earnings per share (Reais) Page: 7

8 Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ Basic earnings per share ON Diluted Earnings per Share ON Page: 8

9 Individual Financial Statements/Statement of Cash Flows Indirect Method (In thousands of Brazilian reais - R$) Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ Net Cash from Operating Activities 514, , Cash Generated from Operations 1,116,774 1,003, Net Profit before Income Tax and Social Contribution 378, , Provision for Contingencies 44, , Loss on Sale of Intangible Fixed Assets 642 1, Depreciation and Amortization 228, , Interests on Loans and Financings Payable 141,298 97, Monetary and Foreign Exchange Variation on Loans and Financings -35,206 50, Expenses with Interests and Monetary Variations 817 1, Income with Interests and Monetary Variations -4,675-10, Allowance for Doubtful Accounts 83,283 51, Provision for Term of Adjustment of Conduct (TAC) 11,220-16, Equity Result Other Provisions/(Reversals) 4, Provision for transfer of funds to São Paulo City Hall Margin of Fair Value over Intangible Assets Arising from Concession Contracts 74, ,759-10, Social Security Obligations 198,749 40, Variation to Assets and Liabilities -339, , Accounts Receivable -88,974-38, Balances and Transactions with Related Parties 12,455 11, Inventories 1,329 5, Taxes Recoverable -95,878-2, Other Accounts Receivable -193,598-12,901 Page: 9

10 Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ Judicial Deposits 13, Loans and Suppliers 11,225-43, Salaries, Provisions and Social -6,990 12,365 Security Obligations Social Security Obligations -3,534-4, Taxes and contributions payable 33,937-23, Other Suppliers 59,827-1, Other Obligations -50,118 31, Contingencies -33,458-59, Tax Revenue 651-5, Other -263, , Interest Paid -200,712-92, Taxes and Contributions Paid -62, , Net Cash from Investment -348, ,690 Activities Acquisition of Items of Fixed Assets -3, Increase in Intangibles -344, , Increase in Investments -10, Restricted Cash 10,201-24, Net Cash from Financing 243,581-93,951 Activities Funding 976, , Amortizations of loans -732, , Payment of Interests on Shareholders Equity 6.05 Increase(Decrease) in Cash & Cash Equivalents Cash & Cash Equivalents at the beginning of the period Cash & Cash Equivalents at the end of the period ,068 82,131 1,988, ,433 2,397, ,564 Page: 10

11 Individual Financial Statements/Statement of Changes to Shareholders Equity from 01/01/2011 to 03/31/2011 (In thousands of Brazilian reais - R$) Code Description Capital Paid Capital Reserves, Options Granted and Treasury Shares Profit Reserves Retained Earnings/(Losses) Other Comprehensive Results Total Equity Opening Balances Adjusted Opening Balances Total Comprehensive Income 6,203, ,255 3,353, ,681,800 6,203, ,255 3,353, ,681, , , Net Income , , Ending Balances 6,203, ,255 3,353, , ,864,593 Page: 11

12 Individual Financial Statements/Statement of Changes to Shareholders Equity from 01/01/2010 to 03/31/2010 (In thousands of Brazilian reais - R$) Code Description Capital Paid Capital Reserves, Options Granted and Treasury Shares Profit Reserves Retained Earnings/Losses Other Comprehensive Results Total Equity Opening Balances Adjusted Opening Balances Total Comprehensive Income 6,203, ,255 2,110, ,438,584 6,203, ,255 2,110, ,438, , , Net Income , , Ending Balances 6,203, ,255 2,110, , ,737,629 Page: 12

13 Individual Financial Statements/Statement of Value Added (In thousands of Brazilian reais - R$) Current Quarter Previous Year Account Account Description 01/01/2011 to 01/01/2010 to code 03/31/ /31/ Revenue 2,412,656 2,292, Sales of Merchandise, Products and Services 1,989,830 1,844, Other Revenue 5,789 5, Revenue from the construction of own assets 450, , (Provision)/reversal of credit losses -33,137-10, Inputs purchased from third parties -921, , Costs of Merchandise, Products and Services sold -764, , Materials, Energy, Third Party Services and Others -154, , Other -2,069-1, Gross Value Added 1,491,386 1,422, Retentions -228, , Depreciation, Amortization and Depletion -228, , Net Value Added Produced 1,263,012 1,279, Value Added Transfers 90,061 63,214 Received Equity Income Financial Income 91,027 63, Total Value Added to Distribute 1,353,073 1,342, Value Added Value Distribution 1,353,073 1,342, Staff 520, , Direct Compensation 230, , Benefits 265, , Government Severance Indemnity Fund for Employees - FGTS 25,167 17, Taxes and Contributions 436, , Federal 408, , State 10,379 10, Municipal 17,858 17, Third Party Capital 212, ,550 Compensation Interest 204, , Rental 8,207 7,627 Page: 13

14 Account code Account Description Shareholders' equity remuneration Retained Profit / Loss for the Period Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ , , , ,045 Page: 14

15 Consolidated Financial Statements/Balance Sheet - Assets (In thousands of Brazilian reais - R$) Account Current Quarter Previous Year Account Description code 03/31/ /31/ Total assets 24,117,337 23,350, Current assets 4,149,616 3,590, Cash & Cash Equivalents 2,399,844 1,989, Receivables 1,110,115 1,109, Customers 969, , Other Receivables 140, , Balances with Related Parties 140, , Inventories 34,888 36, Taxes Recoverable 57, , Current Taxes Recoverable 57, , Other Current Assets 547, , Other 547, , Restricted Cash 292, , Other receivables 254,748 44, Non-current assets 19,967,721 19,760, Long-term assets 948, , Receivables 361, , Customers 361, , Deferred Taxes 91,953 78, Deferred Income Tax & Social Contribution 91,953 78, Credit with Related Parties 218, , Credit with Controlling 218, ,076 Shareholders Other Non-current Assets 276, , Indemnifications Receivable 146, , Judicial deposits 39,391 43, ANA National Water Agency 64,010 62, Other receivables 27,348 49, Property, Plant and Equipment 259, , Intangible 18,759,209 18,546, Intangible 18,759,209 18,546, Concession Contracts 10,895,704 10,737, Program Contracts 999, , Service Contracts 6,010,227 6,096, Software License 5,493 7, New Business 11,894 11, Concession Contracts - Economic Value 519, ,278 Page: 15

16 Account Account Description code Program Contracts Commitments Current Quarter 03/31/2011 Previous Year 12/31/ , ,276 Page: 16

17 Consolidated Financial Statements/Balance Sheet - Liabilities and Shareholders Equity (In thousands of Brazilian reais - R$) Account code Account Description Current Quarter 03/31/2011 Previous Year 12/31/ Total liabilities and Shareholders equity 24,117,337 23,350, Current liabilities 3,675,517 3,506, Labor and Social Security Obligations 250, , Social Security Obligations 18,169 26, Labor Obligations 232, , Suppliers 158, , Domestic Suppliers 158, , Tax Obligations 201, , Federal Tax Obligations 197, ,515 Income Tax and Social ,498 0 Contribution Payable COFINS and PASEP (taxes on revenue) payable 47,789 48, INSS (Social security contribution), payable 23,256 24, Installment Program - Law /03 35,702 35, Other Federal Taxes 9,456 45, State Tax Obligations Municipal Tax Obligations 3,387 4, Loans and financing 1,276,352 1,242, Loans and financing 766, , In national currency 601, , In foreign currency 164, , Debentures 510, , Other payables 1,008, , Liabilities with related parties 11,460 11,395 Debts with controlling shareholders 11,460 11, Other 996, , Dividends and Interests on Equity Payable 354, , Accounts Payable 336, , Refundable amounts 57,767 60, Program contract commitments 90,409 38, Private Public Partnership 27,631 30,831 Page: 17

18 Account code Account Description Current Quarter 03/31/2011 Previous Year 12/31/ Agreement with São Paulo City Hall 71,183 60, Indemnities 11,545 17, Other payables 47,697 47, Provisions 780, ,603 Civil, Labor and Social Security Provisions 104,165 96, Tax Provisions 5,397 3, Tax and Social Security Provisions 81,211 78, Civil Provisions 17,557 14, Other Provisions 676, ,372 Provision for Environmental and ,422 22,802 Deactivations Liabilities Provisions for Customers 286, , Provisions for Suppliers 367, , Noncurrent liabilities 10,577,227 10,162, Loans and financing 7,207,142 7,022, Loans and financing 4,418,714 4,839, In national currency 2,007,711 2,720, In foreign currency 2,411,003 2,118, Debentures 2,788,428 2,182, Other payables 2,670,257 2,446, Other 2,670,257 2,446,971 Other Taxes and Contributions ,627 53,045 Payable Social security charges 1,999,253 1,804, Program contract commitments 71, , Private Public Partnership - PPP 313, , Indemnities 30,847 30, TAC Retired Participants 21,654 20, Deferred Cofins and Pasep 113, , Other payables 75,410 34, Provisions 699, ,227 Civil, Labor, Tax and Social Security Provisions 289, , Tax Provisions 64,368 55, Tax, Social Security and Labor Provisions 65,029 59, Civil Provisions 159, , Other Provisions 410, , Provision for Environmental and Deactivations Liabilities 40,904 42,293 Page: 18

19 Account Current Quarter Previous Year Account Description code 03/31/ /31/ Provisions for Customers 355, , Provisions for Suppliers 13,722 13, Shareholders' equity 9,864,593 9,681, Social Capital 6,203,688 6,203, Capital reserves 124, , Support to projects 108, , Incentive reserve 15,780 15, Profit reserves 3,353,857 3,353, Legal Reserve 460, , Additional Dividend Proposed 68,761 68, Reserve for Investments 2,825,048 2,825, Retained earnings (accumulated deficit) 182,793 0 Page: 19

20 Consolidated Financial Statements/Statement of Income (In thousands of Brazilian reais - R$) Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ Gross revenue from sales and/or services 2,295,690 2,163, Cost of sales and/or services -1,368,424-1,154, Cost of sales and/or services -928, , Construction Cost -439, , Gross profit 927,266 1,008, Operating (expenses) income -497, , Selling expenses -178, ,510 General and Administrative , ,912 Expenses Other operating income 5,282 5, Other operating income 5,817 5,765 COFINS and PASEP (taxes on revenue) Other operating expenses -2,069-1, Loss on write-off of property, plant and equipment items , Tax incentives -1, Other Equity in subsidiaries 429, ,262 Income before taxes and profit , ,372 sharing Financial income 91,063 63, Financial income 95,981 63, Financial income -4, Foreign exchange gains -141, , Financial expenses -210, , Financial expenses 69,097-24, Foreign exchange losses 378, , Income Before Taxes on profit -195, ,845 Income Tax and Social , ,931 Contribution on Net Income Current 13,418 57, Deferred 182, ,045 Net Profit from Continuing , ,045 Operations Net income (loss) 182, , Earnings per share (Reais) Basic earnings per share Page: 20

21 Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ ON Diluted Earnings per Share ON Page: 21

22 Consolidated Financial Statements/Statement of Cash Flows Indirect Method (In thousands of Brazilian reais - R$) Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ Net Cash from Operating Activities 513, , Cash Generated from Operations 1,115,687 1,003, Net Profit before Income Tax and Social Contribution 378, , Provision for Contingencies 44, , Loss on Sale of Intangible Fixed Assets 642 1, Depreciation and Amortization 228, , Intersts on Loans and Financings Payable 141,223 97, Monetary and Foreign Exchange Variation on Loans and Financings -35,206 50, Expenses with Interests and Monetary Variations 824 1, Income with Interests and Monetary Variations -4,697-10, Allowance for Doubtful Accounts 83,283 51, Provision for Term of Adjustment of Conduct (TAC) 11,220-16, Other Provisions 4, Provision for transfer of funds to São Paulo City Hall 74, Margin of Fair Value over Intangible Assets Arising from Concession Contracts -10,759-10, Social Security Obligations 198,749 40, Variation to Assets and Liabilities -339, , Accounts Receivable -89,180-38, Balances and Transactions with Related Parties 12,455 11, Inventories 1,325 5, Taxes Recoverable -96,034-2, Other Accounts Receivable -193,753-12, Judicial Deposits 13, Loans and Suppliers 11,682-43, Salaries, Provisions and Social -6,789 12,398 Page: 22

23 Account code Account Description Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/2010 Security Obligations Social Security Obligations -3,534-4, Taxes and contributions payable 33,842-23, Other Suppliers 59,827-1, Other Obligations -49,807 31, Contingencies -33,458-59, Tax Revenue 651-5, Other -263, , Interest Paid -200,712-92, Taxes and Contributions Paid -62, ,676 Net Cash from Investment , ,200 Activities Acquisition of Items of Fixed Assets -14, Increase in Intangibles -346, , Restricted Cash 10,201-24,062 Net Cash from Financing ,603-93,951 Activities Funding 983, , Amortizations of loans -734, ,211 Payment of Interests on Shareholders Equity Increase(Decrease) in Cash & Cash Equivalents Cash & Cash Equivalents at the beginning of the period Cash & Cash Equivalents at the end of the period ,665 81,515 1,989, ,008 2,399, ,523 Page: 23

24 Consolidated Financial Statements/Statement of Changes to Shareholders Equity From 01/01/2011 to 03/31/2011 (In thousands of Brazilian reais - R$) Code Description Capital Paid Capital Reserves, Options Granted and Treasury Shares Profit Reserves Retained Earnings/Losses Other Comprehensive Results Total Equity Participation of noncontrolling Consolidated Stockholders' Equity Opening Balances 6,203, ,255 3,353, ,681,800 Adjusted Opening 6,203, ,255 3,353, ,681,800 Balances Total Comprehensive , ,793 Income Net Income , , Ending Balances 6,203, ,255 3,353, , ,864, ,681,800 9,681, , ,793 9,864,593 Page: 24

25 Consolidated Financial Statements/Statement of Changes to Shareholders Equity From 01/01/2010 to 03/31/2010 (In thousands of Brazilian reais - R$) Code Description Capital Paid Capital Reserves, Options Granted and Treasury Shares Profit Reserves Retained Earnings/Losses Other Comprehensive Results Total Equity Participation of noncontrolling Consolidated Stockholders' Equity Opening Balances 6,203, ,255 2,110, ,438,584 Adjusted Opening 6,203, ,255 2,110, ,438,584 Balances Total Comprehensive , ,045 Income Net Income , , Ending Balances 6,203, ,255 2,110, , ,737, ,438,584 8,438, , ,045 8,737,629 Page: 25

26 Consolidated Financial Statements/Statement of Value Added (In thousands of Brazilian reais - R$) Current Quarter Previous Year Account Account Description 01/01/2011 to 01/01/2010 to code 03/31/ /31/ Revenue 2,413,743 2,292, Sales of Merchandise, Products and Services 1,990,875 1,844, Other Revenue 5,817 5, Revenue from the construction of own assets 450, , Provision of credit losses -33,137-10, Inputs purchased from third parties -922, , Costs of Merchandise, Products and Services sold -764, , Materials, Energy, Third Party Services and Other -155, , Other -2,069-1, Gross Value Added 1,491,420 1,422, Retentions -228, , Depreciation, Amortization and -228, ,503 Depletion 7.05 Net Value Added Produced 1,263,039 1,279, Value Added Transfer Received 91,063 63, Financial Income 91,063 63, Total Value Added to Distribute 1,354,102 1,342, Value Added Value Distribution 1,354,102 1,342, Staff 521, , Direct Compensation 231, , Benefits 265, , Government Severance Indemnity Fund for Employees - FGTS 25,207 17, Taxes and Contributions 436, , Federal 408, , State 10,390 10, Municipal 17,869 17, Compensation Third Party 213, ,556 Capital Interest 204, , Rental 8,288 7, Pay Equity 182, ,045 Page: 26

27 Account code Account Description Retained Profit / Loss for the Period Current Quarter 01/01/2011 to 03/31/2011 Previous Year 01/01/2010 to 03/31/ , ,045 Page: 27

28 Management s Report and Comments on Performance 1. Financial Highlights In millions of R$ Variation 1T10 1T11 R$ % (+) Gross operating revenues 1, , (+)Construction Costs (2.0) (0.4) (-) COFINS and PASEP (=) Net operating revenues 2, , (-) Costs and expenses 1, , (-) Construction Costs (2.2) (0.5) (+) Equity result (0.1) (1.0) (0.9) - (=) Income before financial expenses (EBIT)(*) (268.6) (38.7) (+) Depreciation and amortization (=) EBITDA(**) (183.5) (21.9) EBITDA Margin % Net income (116.2) (38.9) Income per one thousand shares in R$ (*) Earnings before interest and taxes on income; (**) Earnings before interest, taxes, depreciation and amortization; In the 1Q11, net operating revenues totaled R$ 2.3 billion, 6.1% growth related to 1Q10. Costs and expenses, including construction costs, in the amount of R$ 1.9 billion, presented a decrease of 27.2% related to 1Q10. EBITDA decreased from R$ million in 1Q10 to R$ million in 1Q11, a reduction of 21.9%. EBITDA margin in the 1Q11 reached 28.5% as compared to 38.7% in the same period last year. EBIT decreased 38.7%, from R$ million in 1Q10 to R$ million in 1Q11. The 1Q11 result was particularly affected by the accounting record of R$ million corresponding to the following factors: Complement to the actuarial liability related to the complement of Retirement and Pension Benefits granted by State Law nr 4819/58 (Plan G0) in the amount of R$ million with impact on January 1st, 2011; Adjustment of the amortization period of the intangible assets for the lower between the useful life of the item and the effectiveness of the contract, in the amount of R$ 73.4 million. Discounting the effect from the adjustment of the complement of the actuarial liability, EBITDA would go from R$ million to R$ million, with margin going from 28.5% to 35.4%. Page: 28

29 Net Income would go from R$ million to R$ million if the two factors above had been disregarded. 2. Gross operating revenue Gross operating revenue, including revenue from construction, reached R$ 2.4 billion, corresponding to 6.2% increase related to the previous year. Gross operating revenue related to the rendering of water supply and sewage collection services presented an increase of R$ billion, or 7.9%, from R$ 1.8 billion in 1Q10 to R$ 2.0 billion in 1Q11. The increase mainly relates to: growth in invoiced volume of 2.6% in water and 3.1% in sewage and tariff adjustment of 4.05% applied in September, A number of factors as the expansion of the quantity of connections, the wholesale supply of water for the Municipality of Sumaré, the entrance into an operation with a penitentiary unit in the Municipality of Hortolândia, as well as the resume of growth post 2009 crisis in the industrial category, altogether, have contributed to the increase in the volume invoiced. 3. Revenue from construction Revenue from construction presented a R$ 2.0 million decrease, or 0.4%, when compared to 1Q10, from R$ million to R$ million, resulting from lower investment in the period. 4. Volume invoiced In the following charts are demonstrated the volumes invoiced of water and sewage, according to the category of use and region, in the 1T10 and 1T11. QUARTER VOLUME INVOICED WATER AND SEWAGE PER CATEGORY OF USE - millions of m 3 Water Sewage Water + Sewage By Category 1Q10 1Q11 Var. % 1Q10 1Q11 Var. % 1Q10 1Q11 Var. % Residential Commercial Industrial Public Total Retail Wholesale (7.4) Reuse Water Grand Total Page: 29

30 VOLUME INVOICED WATER AND SEWAGE PER REGION - millions of m 3 Water Sewage Water + Sewage Per Region 1Q10 1Q11 Var. % 1Q10 1Q11 Var. % 1Q10 1Q11 Var. % Metropolitan Regional (2) Total retail Bulk (7.4) Reuse Water Grand Total (1) Not audited (2) Comprised by the coastal region and country side 5. Costs, selling and administrative expenses In the 1Q11, the costs of products and services provided, administrative and commercial expenses, had an increase of 27.2% (R$ million). The proportion of the costs and expenses in the net revenue decreased from 67.9% in the 1Q10 to 81.4% in the 1Q11. In millions of R$ Variation 1Q10 1Q11 R$ % Payroll and related charges General supplies Treatment supplies Services Electricity General expenses Tax expenses Subtotal , Depreciation and amortization Credits write-off Subtotal 1, , Construction costs (2.2) (0.5) Costs, and administrative and selling expenses 1, , Percentage of Net Revenue (%) Salaries and payroll charges In the 1Q11 there was an increase of R$ million or 55.8% in salaries and payroll charges, going from R$ million to R$ million as a result of the following factors: Page: 30

31 5.05% of salary adjustment as of May, 2010; Complement to actuarial liability in the amount of R$ million, referring to the actuarial calculation made in December 31, 2010 related to the Plan G0; nonrecurring to upcoming quarters; Variance in the provision for Profit Sharing in the amount of R$ 7.2 million as a consequence of the reversal of the amounts accrued in 1Q General Supplies In the 1Q11 there was a decrease of R$ 2.8 million, or 8.1%, when compared to the same period in the previous year, from R$ 34.4 million to R$ 37.2 million. The main factors that caused this variance were greater expenses with maintenance materials in the producers and adductor systems, water and sewage treatment stations and elevation stations in the Metropolitan Region of Sao Paulo RMSP, in the amount of R$ 2.5 million Treatment Materials The expenditures in 1Q11 were higher than in 1Q10 by R$ 9.5 million, or 26.3%, going from R$ 36.1 million to R$ 45.6 million. This variance is related to the following factors: Increase of R$ 5.4 million in the consumption of ferric sulfide and aluminum polychloride in replacement of aluminum sulfide caused by the worsening in the quality of water in the Water Treatment Station of Alto da Boa Vista, Rio Claro and Botucatu; and Increase of R$ 3.6 million due to higher consumption of copper sulfide and activated charcoal, extremely seasonal products, which consumption varies according to the climate physical conditions of the reservoirs, caused by the proliferation of algae, flavor and smell in reservoirs that serve the producing system of Alto Tiete. The consumption verified in 1Q10 was below normal, in function of the quality of water at that time, that is, there was a rupture in the trend of expenditures with treatment material. Therefore, the comparison with 1Q11 results is an apparently large evolution. Had this rupture not occurred, the evolution would have been 7.8%. Considering an average inflation of 6.1%, the real increase would be 1.6% Services In 1Q11, this item presented an increase of R$ 16.0 million or 7.4%, from R$ million to R$ million. The main factors that contributed to such variation were: Agreement with Sao Paulo City Hall Page: 31

32 Increase of R$ 12.8 million in the provision made in 1Q11, referring to the actions established; Actions for control to loss of water in the amount of R$ 5.9 million resulting mainly from the maintenance of networks and connections of water and sewage and increase in fraud prevention actions; and Increase of R$ 0.6 million resulting from the transportation of sediments of Lake Parque do Ibirapuera and Parque da Aclimação; Expenditures with risky contracts for the recovery of credits, in the amount of R$ 2.2 million due to the increase of collection actions; Postal charges in the amount of R$ 2.0 million related to the delivery of water bills in some Business Units due to judicial order; Hydrometer reading and delivery of bills in the amount of R$ 2.0 million due to the implementation of the Regional Systems of new technologies in several municipalities that allow higher security and agility in reading and issuance of bills, in addition to the increase in the number of connections and enhancement of actions to control losses in the RMSP; and Contracting of freight and transportation services in the amount of R$ 1.0 million as a result of outsourcing of transportation of chemical products. The following services presented a decrease: Broadcast of advertising campaigns with decrease of R$ 8.9 million, resulting from the finalization of contracts such as: Onda Limpa, SPTV 2nd Edition, Corrego Limpo Phase 2, among others; and Costs with consulting, advisory and specialized services with decrease of R$ 4.5 million due to the contracts such contracts including: organizational restructuring, implementation of value-added management Electric Energy In the 1Q11, this item presented an increase of R$ 11.1 million or 8.5%, from R$ million to R$ million. This result is associated to the weighted average tariff increase between the free market and the captive market around 4.5% and for the increase around 5.7%, which was impacted by the entrance into operation of new operating units General Expenses In 1Q11 there was an increase of R$ 54.7 million or 75.2%, from R$ 72.7 million to R$ Page: 32

33 127.4 million. The factor that contributed the most to such increase was the provision of R$ 76.1 million as provided by the contract with the Municipality of Sao Paulo, which corresponds to 7.5 % of the gross revenues of the capital, deducting contributions to Cofins and Pasep, calculated as of the date of execution of the contract, occurred in June 23, This increase was partially offset by the lower need to accrue provision for judicial contingencies related to 1Q10, in the amount of R$ 32.8 million. 5.7 Depreciation and Amortization This item presented an increase of R$ 85.1 million or 59.5%, from R$ million to R$ million, resulting from the adjustment of the amortization period for the lower between the useful life of the item or the effectiveness of the contract Credit Write-offs In 1Q11, the credit write off presented an increase of R$ 22.7 million, varying from R$ 10.4 million to R$ 33.1 million, mainly due to the need to complement the provision on the invoicing of Public Entities, not made in 1Q10, as well as the lower credit recovery through the receipt of private customers related to the same period in Financial Income and Expenses Financial expenses Interest and charges on domestic loans and financing R$ million 1Q10 1Q11 Variation % Interest and charges on foreign loans and financing Interest judicial proceedings (77.6) (73.0) Other financial expenses (9.1) (52.0) Total financial expenses (44.5) (20.1) Financial income Financial expenses, net of income (83.3) (46.0) 6.1. Financial expenses In the 1Q11 there was an increase of R$ 44.5 million, or 20.1%. The main factors that influenced this result were: Reduction in the amount of financial expenses related to judicial proceedings in the amount of R$ 77.6 million, resulting from the lower need of provision; and The interests on internal loans and financings presented an increase of R$ 38.6 million, due to new funding such as: (i) the 12 th issuance of debentures occurred in Page: 33

34 June, 2010, (ii) 13 th issuance of debentures occurred in January, 2011 and (iii) the disbursements with loan agreements already executed Financial income The financial income presented an increase of R$ 38.8 million mainly related to gains with financial investment due to higher cash available for investment. 7. Income and expenses with monetary variation R$ million 1Q10 1Q11 Variation % Monetary variation on loans and financing (6.2) (23.8) Exchange variation on loans and financing 24.2 (69.1) (93.3) (385.5) Other monetary variations Positive monetary variations 61.8 (34.8) (96.6) (156.3) Negative monetary variations (11.2) (47.9) Net monetary variations 38.4 (47.0) (85.4) (222.4) 7.1. Expenses with monetary variation The effect of foreign exchange income in the 1Q11 was R$ 96.6 million lower to the same period of 1Q10. This variance is due to: The foreign exchange on external loans and financings generated a negative impact in the amount of R$ 93.3 million resulting from the 2.3% devaluation of the U.S. dollar in the 1Q11 versus a 2.3% appreciation in the 1Q10. Monetary variations on internal loans and financings decreased R$ 6.2 million, mainly due to the reduction of R$ 8.3 million resulting from the IGPM variation in 2.43% in 1Q11, as compared to the variation of 2.77% in 1Q10; and the increase of R$ 2.1 million due to the higher variation of the TR in 1Q11 of 0.25%, as compared to 1Q10 of 0.08%; and Other monetary variances on indemnification of judicial law suits with an increase of R$ 2.9 million Income from monetary variance The income from monetary variation presented a decrease of R$ 11.2 million. This result arose mainly from updating installment agreements and restatement of deposits referring to judicial suits occurred in 1Q Operating Indicators Page: 34

35 In the last 12 months, the loss ratio remained steady around 26% due to the discontinuity of the maintenance services of water networks provided by third parties and problems from contractual transition. In the second half of 2010, the works entered into normal course which shall bring the ratio back to the track planned. However, as the ratio is a 12-month moving average, the effects of such actions have not yet been impacted. Operational Indicators* 1Q10 1Q11 Variation % Water connections (1) 7,161 7, Sewage connections (1) 5,563 5, Population directly served by water supply (2) Population served by sewage collection (2) Number of employees 15,165 15,153 (0.1) Water volume produced Water loss (%) (1) In Thousand units at the end of the period. (2) In thousands of people at the end of the period. It does not include wholesale invoicing. (3) In millions of m3 accumulated at the end of the period. * Non audited Page: 35

36 EXPLANATORY NOTES (Amounts in thousands of Brazilian reais - R$, unless otherwise stated ) 1. OPERATIONS Companhia de Saneamento Básico do Estado de São Paulo - SABESP ( SABESP or the Company ) is a mixed-capital company headquartered in São Paulo, controlled by the São Paulo State Government. The Company is engaged in the provision of basic and environmental sanitation services, and supplies treated water on a bulk basis and provides sewage treatment services for another six municipalities of the Greater São Paulo Metropolitan Area. In addition to providing basic sanitation services in the State of São Paulo, SABESP may perform these activities in other states and countries, and can operate in drainage, urban cleaning, solid waste handling and energy markets. The new SABESP vision sets forth as objective to be recognized as the company that has universalized the sanitation services in its area of operation, focused on the customer, in a sustainable and competitive way, with excellence in environmental solutions. In March 31, 2011, the Company operated the water and sewage services in 364 municipalities of the State of São Paulo, having temporarily ceased the operation of the municipalities of Itapira, Aracoiaba da Serra, Iperó, Cajobi and Álvares Florense due to judicial orders, which suits are in progress. In the majority of these municipalities, the operations result from concession contracts executed for 30 years. 104 concessions were expired on March 31, 2011 being that all of them are in negotiation phase with the municipalities. Between 2011 and 2033, 44 concessions will expire. The remaining of these concessions operate under a rollover basis. These concessions with indefinite term and expired concessions under renegotiation, are amortized over the useful lives of the underlying assets. Up to March 31, 2011, 216 program contracts were executed. Management expects that all the expired concessions will be renewed or extended, thus there will not be a discontinuity of the water supply and sewage collection in these municipalities. On March 31, 2011 the net book value of intangible used in the 104 municipalities where the concessions are under negotiation totaled R$ 5,768 million and the net revenue for the period ended on March 31, 2011 totaled R$ million. In the municipality of Santos, in the Baixada Santista region, which has an significant population, the Company operates supported by a public authorization deed, a similar situation in other municipalities in that region and in the Ribeira valley, where the Company started to operate after the merger of the companies that formed it. The Company s shares have been listed on the Novo Mercado (New Market) segment of the BOVESPA (São Paulo Stock Exchange) since April 2002, and on the New York Stock Exchange (NYSE) as ADRs since May All information about areas of concession, number of municipalities, water and sewage volume and other related data disclosed in this report, which do not arise from the accounting and/or financial statements, have not been examined by the independent auditors. Page: 36

37 The present quarterly information was approved by the Board of Directors on May 12, PRESENTATION OF THE QUARTERLY FINANCIAL STATEMENTS (i) Presentation of the Quarterly Information The consolidated quarterly information of March 31, 2011 was prepared based on CPC 21 Interim Financial Information (individual and consolidated) and the international standard IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board (IASB) consolidated, and is presented in a form conducive to the norms issued by CVM, applicable to the preparation of Quarterly Information ITR. Thus, therefore, these IFRS consider the Circular Office Memorandum CVM/SNC/SEP 003 of April 28, 2011 which allows that the entities present selected explanatory notes, in case of redundancy of information already disclosed in the Annual Financial Information. The quarterly information for the period ended on March 31, 2011, therefore, do not include the notes and disclosures by the CPC ( Committee of Accounting Pronouncements ) for the annual consolidated financial statements and, consequently, must be read together with the consolidated financial information in CPC s and IFRS for the year ended on December 31, (ii) Individual and Consolidated Financial Information The individual financial information are being disclosed together with the consolidated financial information and were prepared in a form conducive to the disclosure by note 2 of the Annual Financial Statements. The consolidated financial information was prepared according to the accounting Standards adopted in Brazil and the IFRS International Financial Reporting Standards, that includes the statements of SABESP and its subsidiaries: Sesamm Serviços de Saneamento de Mogi Mirim S/A, Águas de Andradina, Saneaqua Mairinque, Aquapolo Ambiental and Attend Ambiental which were all included to the proportion of their equity interest. The Company maintains shared controlling interest, which have the same fiscal year of the joint controlled companies. The accounting policies of its subsidiaries are in line with Company s policies. The consolidation process of assets, liabilities and income statements consists in adding the balances of assets, liabilities, revenues and expenses, according to their nature, eliminating the equity interests of the holding in the capital stock and accumulated result of the consolidated company. Although SABESP s equity interest in the Capital Stock of its subsidiaries is not majority interest, the shareholders agreement considers the veto power on certain management matters, indicating participative shared control. Therefore, the financial information was proportionally consolidated. The consolidated companies were: Sesamm On August 15, 2008, the Company, together with the companies OHL Medio Ambiente, Inima S.A.U. Unipersonal ( Inima ), Tecnicas y Gestion Medioambiental S.A.U. ( TGM ) and Estudos Tecnicos e Projetos ETEP S/A, with duration of 30 years counted Page: 37